Profile of a Bankruptcy Filer - 2007 Report

The Institute for Financial Literacy's Center for Consumer Financial Research recently released its annual report on the demographics of bankruptcy filings for 2007.

The IFL, a non-profit organization, aims to make financial literacy a more achievable goal for all American adults.

According to the Center for Consumer Financial Research, the average person who filed bankruptcy in 2007 was:

White

Married

Employed

Age 35-44

Educated through high school, with some college possible

Earning no more than $30,000 per year

The researchers also determined that the most common reasons filers needed bankruptcy protection were overextensions on lines of credit, recent decreases in income, recent job losses and/or illnesses/injuries.

By getting an idea of who files bankruptcy each year, researchers apparently hope to provide important information to policymakers, businesses and financial educators as they attempt to address the issues that cause bankruptcy and educate citizens about how to protect their money and assets.

Besides the profile of the average bankruptcy filer, the Center's research also highlighted areas of concern, as indicated by bankruptcy filings:

Women filing bankruptcy at a rate greater than their presence in the population;

Men filing bankruptcy in increasing numbers;

Bankruptcy filing rates of middle-aged Americans;

The effect of education level on filing bankruptcy; and

The role of identity theft in bankruptcy cases.

The report uncovered a few red flags that could be triggers for legislative action. First, the quantity of bankruptcy filings among those in the 35-44 age group suggests that Americans approaching retirement age do not have the means to stop working.

This could indicate that this group is not ready for retirement, and even that new policies need to be implemented to encourage/force adults of working age to save money for retirement so that they don't have to rely on a state that may not have the resources to support them in their dotage.

The second significant finding concerns the role of identity theft in bankruptcy filings: though federal laws are in place to protect those victimized by identity theft, it's still leading some Americans to file bankruptcy.

This suggests that businesses, financial educators and legislators need to join forces to educate Americans about identity theft prevention, increase penalties for identity thieves and/or improve the infrastructure in place to address identity theft incidents.

Third, the role of higher education in bankruptcy filings should be analyzed, according to the Center, which suggests that alternative methods of funding for post-high school studies should be explored.